FFHWatcher

Prem talks about BV all the time. It is on the second line of his annual letter to shareholders (2008), so I would say he finds it quite critical. What reports were you reading that Fairfax wrote that didn't mention the specific BV? He mentions Book Value 10 times in the 12 page Annual Letter to Shareholders and 22 times in the 2008 Annual Report. Kinda hard to miss. ??? www.fairfax.ca

I agree with Partner24 and just let FFH make investment decisions and try not to spend too much time suggesting what we think Prem, Brian, Francis, etc. should be doing with the investment portfolio and shareholders money. I say, so far, so good for the first 25 years or so. Back to Wells. I am certainly no analyst but my comment is regarding human nature and patience. I would have a tough time earning a 100% return on my investment in a few months (call it lucky or easy money) and then waiting 3+ years for the next 100%. Don't get me wrong, 3 year x 100% rate of return is extraordinary. I am only commenting on human nature and perhaps our inner greed.

I don't think I intended my initial comments to be a complaint about disclosure. I was questioning the purpose of the (positive) disclosure and the detail. Personally, I think ORH did a better job of disclosing the change since the end of the quarter. I think both FFH and ORH could have gotten away with, "As you know, the markets have improved significantly since the end of the quarter and as such, many of our reported MTM losses are no longer losses, HOWEVER markets change quickly and those MTM losses could be higher or lower before this next quarter closes." That would have been sufficient, in my opinion. With their current disclosure, it is now 'expected' that they need to make a press release everytime their equity portfolio moves by 10%. I remember when financial advisors would do a quarterly portfolio review with clients a few weeks after the end of the quarter. If the quarter was bad but had improved in the last weeks, you would certainly bring that to the clients attention to add a positive 'spin' to the report. If things had deteriorated further since the end of the quarter, the 'desire' to share that information with the client wasn't so forthcoming. As long as the additional disclosure is balanced, than fine. If anyone can do it, it is Prem/FFH.

How do others feel about the post March 31st detail? Personally, I think Prem and Co. need to take the high road as they have always done in the past. All true shareholders know approx. what the FFH investment portfolio is and can guesstimate what has happened since March 31. They didn't comment on their post March 31 underwriting, losses, hardened market conditions, etc. which is the actual business that they are in. So why comment about the investment gains? Yes, I know everybody wants to know the daily value of their portfolio, what they own, how many shares, what is their average cost and they have set up their own spreadsheets and portfolio tracking webpages with all the details that are disclosed on the SEC website. Who wouldn't prefer daily disclosure of all FFH trades? (You want to say 'no' but I'm not sure that is completely true). Would they have done the same if they had lost $250M, $500M, etc. since the quarter end? Maybe, maybe not? Why start commenting on post-quarter end results that aren't actual results until the end of June ? This was the Q1 report, right? It wasn't the Q1 and YTD numbers. I can see if they publicly announced an acquisition and released additional details regarding the acquisition or another extraordinary publicly announced event. The market moving 10 or 20% in either direction is no longer extraordinary. I can also see it if they realized extraordinary gains but all these gains post March 31 are presumably unrealized, so why report it? Yes, the MTM accounting changes things but why report specifics? They could have easily kept it 'general' and pointed how equity values change rapidly, just as they do for CDS values. Yes, I am long.

be careful what you wish for. :)

My recollection was that Prem said they started buying WFC around $20. They continued to buy as the price fell. This is where my recollection is foggy. Prem either said that they picked up more at $14. or they got their avg. price down to $14. Not sure which.

No front page stuff!!! Unlike a stock, front page stuff can only hinder the performance of a mutual fund. A stock, on the other hand, relies on supply and demand.

I have not read the article but $4B net worth? Maybe the author did a 10x multiple based on the multiple voting shares? Certainly no one would count the '10 votes' per share as representing 10 shares and then multiple the share price times his number of votes? Formula 1 multiple voting share x 10 votes each = 10 10 votes per share x share price = net worth

On the longer tail business, won't it take some time before poor underwriting shows up? I find it hard to believe that anyone would really be looking more than 6-9 months out at AIG. So, in my mind they really don't care if they write bad business...the gov't would just throw in a few more billion. No biggie. On one hand, other insurance companies would love competing against a failing insurance company but on the other hand, if the US gov't is backing stopping that failing insurance company and they are giving you the cheapest price, why not place it with AIG?

I don't see the value in ORH redeeming the preferreds at any time. 8% cost of borrowing seems pretty good and if interest rates creep up, than 8% might be really cheap. ORH has restrictions in redeeming them and they have to pay $25.+, not market value. If ORH has an extra $25M lying around, it seems logical to buy back their common and/or invest in some of their stocks and/or increase their dividend. I too was hoping on the ORH redemption investment thesis. I read the prospectus and it changed my mind due to the $25. repurchase limitation. Hey, I could be wrong but that's how I interpreted the prospectus. I guess their isn't even a fixed redemption date in the future? Perpetual prefs? I will re-read it again a little later.

I thought the same. I believe I read in the prospectus that they are only allowed to redeem after Oct. 2010 and they have to pay at least the $25.

Is the FFH telephone ringing off the hook, or what? BRK and FFH (and others) are taking their low yielding cash and typically investing in 10% + yielding securities. These are unprecedented times. We will all likely look back on 2008 + 2009 + ? and say, "Crap, I learned a lot during those years!!" Let's hope we can all profit during this lesson.